Port Demands Repayment of $1.8 Million From Fleets

This story appears in the Aug. 30 print edition of Transport Topics.

The Port of Los Angeles has told 15 motor carriers that received subsidies to buy new cleaner-running trucks that they must return more than $1.8 million for trucks that did not make enough visits to the port last year.

Officials said a preliminary analysis showed that 498 of the 2,087 new, cleaner-burning tractors the carriers bought with the aid of incentive funding last year failed to meet the required 150 drayage trips annually.

Truckload carrier Swift Transportation Co. Inc., Phoenix, owed more than $1.6 million, the port’s analysis found.

The port said 428 of the 591 new 2007 federal emissions-compliant trucks that Swift purchased with incentive funds did not make the required number of trips to satisfy a contractual agreement. The analysis did not disclose how many trips any individual truck made to the port or how much incentive money any carrier received.

David Berry, vice president of Swift, told Transport Topics on Aug. 23 that the company is reviewing the analysis and believes it may owe less money.

“We have a lot of questions about their data and their data collection,” Berry said of the port’s analysis. “It’s all very preliminary information. It doesn’t mean we think they’ve made some mistakes, but we don’t know.”

Swift ranks No. 10 on the Transport Topics 100 list of the largest U.S. and Canadian for-hire carriers.

Berry declined further comment, but he has said in testimony to the port’s harbor commission in recent months that the recession put a damper on Swift’s plans to get more involved in the drayage business in Southern California.

The $44 million Early Commitment and Efficiency Incentive Program in 2008-09 awarded qualified carriers up to $20,000 for each 2007 federal emissions-compliant truck they bought for drayage use.

Carriers receiving funding originally agreed to make at least 300 trips a year to the Port of Los Angeles for five years, with the first year ending June 30. In early June, officials cut the required number of trips to 150 to either the Port of Los Angeles or the Port of Long Beach because a decline in container traffic made it “nearly impossible” for carriers to meet the original goal.

The data sent to those carriers with reimbursement requirements came from the port’s terminal operators, who maintain computer records of “gate move” numbers, said Chris Cannon, project manager for the port’s clean trucks program.

Carriers assessed penalties will have until the end of September to verify or refute the numbers, and then they must reimburse the port by Dec. 31, Cannon said.

Besides Swift, the port said Knight Transportation Inc., also based in Phoenix, owes $83,000 for 22 trucks it purchased with incentive funding that did not make the 150 trips each. Todd Carlson, general counsel for Knight, said the carrier is reviewing its internal records and believes that all of its trucks made the minimum number of visits to the port.

In addition, Meyer Trucking Inc., King City, Calif., owes the port $78,000 for the 26 trucks that it purchased with port incentive funds but fell short of the minimum number of trips.

Knight bought 170 incentive-funded trucks, and Meyer bought 30 trucks.

“The amount of business that was supposed to be available was not available,” said Seth Sorci, general manager of Meyer Trucking.

Each of the remaining 12 carriers on the reimbursement list had no more than four trucks that fell short of the port’s trip goal.

Carriers assessed penalties have the option of selling the trucks purchased with incentive funding to a registered port drayage operator within six months.

Under the terms of the contract, carriers that did not make the minimum number of trips would be required to reimburse the port from $3,000 to $4,000 each year they fall short of the required trips.

The port said it also plans to award 11 carriers a total of $514,000 in bonuses because they exceeded 480 trips to pick up containers at the ports of Los Angeles and Long Beach. At least 240 trips had to be to Los Angeles, Cannon said.

The “efficiency incentive” goal originally was set at 600 trips but was reduced because of the recession.

Cannon said the program was funded mostly from the port’s general revenue fund, as well as from clean trucks program container fees.

Although the port would have been due $5.5 million if the 300-trip minimum had been enforced, Cannon said the program served its purpose.

“It turned out to be an extremely good program for the port and one that helped get us ahead of schedule in getting clean trucks on the road,” Cannon told TT.

Although the grants were valued at as much as $20,000, the trucks cost $100,000 or more each, Cannon said.

“It was money well spent,” said Phillip Sanfield, a port spokesman. “Although we spent a lot of money, these private trucking firms spent much more.”